GVC Wins Bidding War for Bwin.Party as 888 Concedes

A months-long war for prominent Gibraltar-based online sports betting firm bwin.party has reached an apparent conclusion, with London-based GVC Holdings PLC emerging as the winner.  As part of the deal, GVC and bwin.party have issued a joint prospectus in which 888 has officially recommended the GVC bid to its general shareholder class, which is expected to approve the deal in the near future.

The approval of the GVC bid by bwin.party means that the company has formally dropped its prior recommendation of an earlier approved bid by industry rival 888 Holdings.  888, in turn, conceded defeat in the bidding war by formally withdrawing its own standing offer.  The flip in recommendations comes after both firms had made earlier bids for bwin.party earlier this summer, kicking off a brief bidding war that ended with today’s formal acceptance of the latest GVC bid.

The technical aspects of the approved bid are as follows:

• For each existing share of bwin.party stock, current bwin.party shareholder will receive 25 pence (about USD $0.38 or 0.34 Euros) in cash and 0.231 shares on new GVC stock, to be issued when the sale is complete;
• The offer represents a per-share value of 129.64 pence per share of existing bwin.party stock, based on yesterday’s closing price for both company’s shares on London Stock Exchange markets;
• The total value of bwin.party is then pegged at £1.116 billion, per the term’s of today’s deal.

Philip Yea, the chairman of bwin.party, said this about the newly accepted GVC offer: “In recommending the Offer from GVC, the Board has taken into account many factors including, but not limited to, the headline value per share and the consideration being offered, the level, timing and deliverability of the financial synergies to be generated and the enlarged Group’s growth strategy in an increasingly competitive marketplace. As a result of these and other factors, including the proven track record of GVC’s management team in creating substantial value for shareholders, after a carefully managed and diligent review process, the Board has withdrawn its recommendation for the 888 offer and is now advising bwin.party shareholders to vote in favour of the Offer from GVC.”

Meanwhile, Kenneth Alexander, Chief Executive Officer of GVC, offered this quote:

“GVC is the natural partner for bwin.party considering our strong sports betting and online gaming pedigree. Sports betting is in our DNA and leveraging GVC’s experience of successfully acquiring and restructuring online gaming businesses, notably Sportingbet in 2013, we look forward to merging the two operations to deliver long term value for combined shareholders. GVC has been working closely with bwin.party’s management and has identified many talented individuals with whom it looks forward to working to ensure the future success of the enlarged business.”

The final GVC bid still ranks about 8-10% higher in total value than a similar-sweetened bid made by 888 earlier this week.  Bwin.party had initially recommended 888’s first bid to its shareholders on the strength of strong business synergies between the two firms, despite 888’s bid being consistently lower in value compared to GVC’s offers.  Switchin to GVC also ends a threat made by several GVC executives in business reports this week that the company was strongly considering a hostile-takeover attempt, should its latest bid be spurned in the way its earlier offers had been.

Despite winning this battle for bwin.party, GVC still has a steep task at hand: returning to profitability a company which has been mired in debt since the merger of giants bWin and PartyGaming about four and a half years ago.  In that time, the merged company has completed a nearly 90% drop from the height of the market valuation of its two core companies last decade.

For its losing effort, 888’s executives didn’t sound too displeased.  “I don’t see them as a competitor,” 888 CEO Brain Mattingley told the UK’s Financial Times. “They will take what failed with Bwin and do more of it. They have the same [software] platform, the same managers, the same marketing. They even still have Norbert [Teufelberger]. The guy who destroyed the value of the company is still in there!”  Teufelberger, bwin.party’s current CEO, is slated to continue on after the acquisition in a non-executive position

For its part, GVC has indicated that it will continue to run the company as is for the short term, but don’t be surprised if the bwin.party online-poker operations are divested early in 2016.  Online-poker giant Amaya Gaming openly covets that portion of the business for its political implications, and was a part of the initial GVC bid until being replaced by another secondary investor, Cerberus Capital Management.